Gold price today: Yellow metal falls nearly 1%; support seen at Rs 49,900-49,700

Gold was trading 1 percent lower on October 7 tracking a muted trend in the international spot prices that were near a one-week low after the US President Donald Trump halted stimulus talks, boosting the dollar.

On the Multi-Commodity Exchange (MCX), December gold contracts were trading lower by 0.91 percent at Rs 50,066 per 10 gram at 0930 hours. December silver futures were trading 1.4 percent lower at Rs 59,674 per kg.

Prospects for more aid for Americans struggling through the COVID-19 pandemic and US airlines seeking to avert a wave of layoffs crumbled on October 6 when Trump ended negotiations until after the November election, a Reuters report said.

The move triggered a knee-jerk reaction in global commodities as safe-haven buying shifted from bullion to the dollar again.

Gold settled at $ 1,908.80 with a loss of 0.59 percent and silver at $23.92. losing 2.60 percent. Gold and silver also ended weaker in the domestic market despite weakness in the rupee.

“We expect both the precious metals to open gap down on Wednesday after the US President halted US stimulus talks. Gold could test its support levels of $1,880-18,72 per troy ounce again in today's session and silver could also test $23.20-23 per troy ounce levels in the international markets,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart told Moneycontrol.

“At MCX, gold could test Rs 49,900-49,700 levels again while 50,660 will act as major resistance for gold. Silver could test Rs 59,500-58,800 levels again, while 61,200 will act as major resistance in today's session. The sell-on-rise strategy will work in both the precious metals in today's session,” he said.

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Expert: Sriram Iyer, Senior Research Analyst at Reliance Securities

International gold declined more than 1 percent on October 6, while silver fell over 4 percent and both retreated from a two-week high hit earlier after Trump called off negotiations on a stimulus package until after the election.

Trump's surprise move came after US House of Representatives Speaker Nancy Pelosi said that progress was being made in her negotiations with the Trump administration on a relief bill. The dollar rebounded on October 6 and weighed on sentiments.

Earlier in the day, Federal Reserve Chair Jerome Powell warned that the US  economic recovery remained far from complete and could still slip into a downward spiral if the coronavirus was not effectively controlled and growth sustained.

Markets will wait for further cues from the release of Federal Reserve's latest policy meeting minutes. Domestic bullion could start the trade flat, tracking international prices.

Technically, MCX December gold gave a sharp fall after reaching a 21-Daily Moving Average, which is placed at 50,950, indicating a bearishness in the counter below 50,700. Prices could trade in the Rs 50,250-50,750 range.

MCX December silver resisted to 62,350 levels where it gave a breakdown below 61,000, indicating that the bearish trend will continue in the coming session. Support is at 60,200-59,600 levels and resistance is at 61,550-62,300 levels.

Ravindra Rao, VP- Head Commodity Research at Kotak Securities

Gold weakened as the US dollar bounced back from recent lows on safe-haven buying after President Trump announced a halt in US stimulus talks.

ETF outflows also showed weaker investor buying interest. Gold has slipped back below $1,900 and we may see some extended losses with the dollar on a firmer footing, however, a sharp decline is unlikely as concerns about the US economy may continue to weigh on the dollar.

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